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Future Value Formula:
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The Future Value of Monthly Investment calculates the total value of regular monthly investments at a future date, considering compound interest. It helps investors understand how their regular contributions can grow over time with the power of compounding.
The calculator uses the future value of annuity formula:
Where:
Explanation: This formula calculates the accumulated value of equal monthly payments earning compound interest over a specified period.
Details: Understanding future value helps in retirement planning, education savings, and long-term financial goals. It demonstrates the power of regular investing and compound interest over time.
Tips: Enter monthly investment amount in USD, annual interest rate as a percentage, and investment period in years. All values must be positive numbers.
Q1: What is the difference between future value and present value?
A: Future value calculates what an investment will be worth in the future, while present value determines what a future amount is worth today.
Q2: How does compounding frequency affect the result?
A: More frequent compounding (monthly vs. annually) results in higher future values due to interest being calculated more often.
Q3: What is a good monthly investment amount?
A: This depends on individual financial goals, but starting early with consistent contributions, even small amounts, can lead to significant growth over time.
Q4: Can this calculator be used for different currencies?
A: Yes, the calculation works for any currency as long as you maintain consistency in the currency units used.
Q5: What assumptions does this calculation make?
A: It assumes constant monthly contributions, fixed interest rate, and regular compounding. Real-world returns may vary.